Education Department Hand-Wringing About “Data Privacy” An Attempt To Distract From Real Problem: They Don’t Know How To Do Their Job

The Record Shows That Betsy DeVos And Her Department Have Been Incapable of Supervising Student Loan Servicers 


WASHINGTON, D.C. — In the wake of today’s revelations that even the Kathy Kraninger-led CFPB thinks the Department of Education is getting in the way of holding student loan servicers accountable, Allied Progress released the following statement on the Trump administration’s disastrous effort to “protect” student borrowers:

“The evidence shows that Betsy DeVos and the Trump administration have put the needs of student loan servicers ahead of borrowers time and time again,” said Derek Martin, Director of Allied Progress.

Martin continued, “Rather than get serious about protecting consumers and letting the CFPB do its job, the DeVos-led Education Department has gone to bat for big businesses like Navient while leaving student loan borrowers to fend for themselves. When even Kathy Kraninger, who’s let CFPB enforcement lapse is complaining about too little being done on behalf of the public, there’s a big problem here.  If President Trump were serious about protecting student borrowers, he’d demand that Secretary DeVos give the CFPB the data it needs to do basic accountability work. Anything less than that is the sign of a weak President whose left hand doesn’t know what the right hand is doing.” 

Multiple audits and reports on the Department of Education have shown they’re incapable of properly overseeing the servicers that collect student loan payments from millions of borrowers across the country. It is the predictable result of an Education Department being run by an out-of-touch billionaire who cannot possibly understand the struggles of everyday borrowers dealing with crushing amounts of student loan debt.

Background:

The Department Of Education Has Repeatedly Failed To Hold Student Loan Servicers Accountable Under Betsy DeVos’ Leadership

November 2018: Audit RevealsThat Navient May Have “Driven Tens Of Thousands Of Borrowers… Into Higher Cost Repayment Plans,” And The DepartmentOf EducationMay Have Hidden The Evidence. “One of the nation’s largest student loan servicing companies may have driven tens of thousands of borrowers struggling with their debts into higher-cost repayment plans. That’s the finding of a Department of Education audit of practices at Navient Corp., the nation’s third-largest student loan servicing company. The conclusions of the 2017 audit, which until now have been kept from the public and were obtained by The Associated Press, appear to support federal and state lawsuits that accuse Navient of boosting its profits by steering some borrowers into the high-cost plans without discussing options that would have been less costly in the long run.” [Ken Sweet, “AP Exclusive: Audit points to deceptive practices by Navient,” Associated Press, 11/20/18]

February 2019:The Education Department’s Inspector General Issues A “Critical New Report” On How The Office Of Federal Student Aid (FSA) “Failed To Adequately Supervise” Student Loan Servicers, “Rarely Penalizing Them” For Not Complying With Federal Requirements. “A critical new report from the U.S. Department of Education’s Office of Inspector General finds the department’s student loan unit failed to adequately supervise the companies it pays to manage the nation’s trillion-dollar portfolio of federal student loans. The report also rebukes the department’s office of Federal Student Aid for rarely penalizing companies that failed to follow the rules.” [Cory Turner, “Federal Watchdog Issues Scathing Report On Ed Department’s Handling Of Student Loans,” NPR, 02/14/19]

o  FSA “did not analyze the records relevant to identified instances of noncompliance to identify trends and recurring noncompliance for each servicer and across all servicers.” [“Federal Student Aid: Additional Actions Needed to Mitigate the Risk of Servicer Noncompliance with Requirements for Servicing Federally Held Student Loans,” U.S. Department of Education, 02/12/19]

o  FSA “rarely used available contract accountability provisions to hold servicers accountable for instances of noncompliance.” [“Federal Student Aid: Additional Actions Needed to Mitigate the Risk of Servicer Noncompliance with Requirements for Servicing Federally Held Student Loans,” U.S. Department of Education, 02/12/19]

o  FSA “did not incorporate a performance metric relevant to servicer compliance with Federal requirements into its methodology for assigning loans to servicers.” [“Federal Student Aid: Additional Actions Needed to Mitigate the Risk of Servicer Noncompliance with Requirements for Servicing Federally Held Student Loans,” U.S. Department of Education, 02/12/19]

  • A 2018 Inspector General Report Showed That CFPB Takes Data Collection Security And Privacy Issues SeriouslyThe Office of the Inspector General for the CFPB issued a report that showed that the CFPB has “implemented” a program that addresses “privacy requirements and security risks” associated with handling private data. The report noted that the CFPB has “documented privacy policies and procedures covering a wide range of topics.” [Manatt, Phelps & Phillips, LLP, “OIG Audit Addresses Data Security Concerns at the CFPB,” JD Supra, 03/02/18]

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